Last week I wrote about how measuring things regularly focuses attention and leads to action and improvement. Today I want to share another vital point about measuring things: The way you display your measurement data has a huge impact on the value of that data. Charts speak louder than numbers.
One of the most important metrics in any business is revenue. It makes sense to compare revenue figures to the goal, or budget. The absolute best way to do that is using a chart called “The Shin Line.”*
To make a Shin Line, plot your weekly cumulative revenue** goal on an Excel chart. Depending on your monthly goals it will be a straight or slightly curvy line going from $0 in Week 0 to your annual goal in Week 52. Then plot your cumulative actual each week. The result will look something like the chart at the top of this page.
The beauty of the Shin Line is it will tell you immediately how you have done throughout the year and you are doing right now against your annual goal.
Look at the chart above. You can see that we achieved revenue above target for most of the year so far. Things were going great. Then something changed and sales slowed down. As of today (today=the end of the blue line) cumulative revenue is below cumulative goal. The slope at the end of the blue line suggests that things are getting even worse.
This chart raises lots of questions:
- What was happening earlier in the year when the blue line was growing faster than the red line?
- What changed and caused the blue line to flatten?
- Sales have suddenly become much worse recently. What changed?
Asking these questions would help me understand my business better. It probably would give me some ideas about changes to make now to hit my revenue goal.
The Shin Line also acts as an early warning system for opportunities or problems. Seeing this chart every week, I would have started asking questions as soon as I saw the blue line get steeper or flatter.
Create a Shin Line for your business, today!
*Back when I worked on the Yahoo! Mail team, my colleague responsible for promoting Mail advertising to the Yahoo! sales team was Tom Shin. He created this chart each week to show the team how we were doing against our annual goal. In his honor we named it “The Shin Line.” It stuck, as in “How’s our Shin Line so far this quarter?”
**Cumulative revenue is simply the total sum of weekly revenue you achieve or plan to achieve by some point in time.